Sound financial practices are a core value of any successful enterprise; and should be. It may come as a surprise that monitoring money spent against planned expenditures is not the best way to evaluate the progress of software projects. The reason is simple: by the time financial measures indicate that a project is off track, it is often too late to take effective corrective actions or identify alternative courses of action.
Here is an example that illustrates this. Let’s take a hypothetical project plan with these characteristics:
- Planned project duration of 1 year
- Full time staff of 6 for the length of the project
- Billing rate of $100/hour
- 335 business requirements to complete
- Project begins at the start of June and is scheduled to complete May 31 of the following year
According to this plan, the project should have a labor cost $1.245 million. Now, using a software project monitoring tool, SLIM-Control, let’s see what the project looks like at the end of September.
If we only look at money spent, the project is on track since planned and actual expenditures are exactly the same. However, when we look at the progress of the actual work completed, a different story emerges. The project got off to a slow start and the gap between what was planned and what has been delivered has increased every month. Unless this is rectified, the project will last longer and cost more than originally planned. Here is a forecast of what will happen if the current trend continues. The project will complete over two months late and cost an additional $215,000.